Answer:
Requirement <em>"a. Optimal run size (Round your answer to a whole number, following normal rules of rounding.) EPQ b. Use your final answer from part a to determine minimum total annual cost for carrying and setup. (Round your answer to a whole number.) Total Annual Inventory Cost"</em>
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a. Annual Demand D = 51450
Daily demand d = 210 {51450 / 245}
Daily production p = 800
Carrying cost per wheel per year H = $1.90
Setup cost S = $43
Optimal run size (EPQ) = √((2*D*S) / (H*(1 - (d/p))))
Optimal run size (EPQ) = √((2*51450*43) / (1.90*(1 - (210/800))))
Optimal run size (EPQ) = √((2*51450*43) / (1.90*0.7375))
Optimal run size (EPQ) = √(4424700 / 1.40125)
Optimal run size (EPQ) = √3157680.64
Optimal run size (EPQ) = 1776.986
Optimal run size (EPQ) = 1,777
b. Total Annual Setup cost = (D*S) / EPQ
Total Annual Setup cost = (51450*43) / 1777
Total Annual Setup cost = $1,244.99
Total Annual Carrying cost = ((H*EOQ)/2) * (1-(d/p))
Total Annual Carrying cost = ((1.90*1777)/2) * (1-(210 / 800))
Total Annual Carrying cost = ((1.90*1777)/2) * 0.7375
Total Annual Carrying cost = $1,688.15 * 0.7375
Total Annual Carrying cost = $1245.010625
Total Annual Carrying cost = $1,245.01
Total Minimum Annual cost for Carrying and Setup = Total Annual Carrying cost + Total Annual Setup cost
= $1245.01 + $1244.99
= $2,490
